The U.S. dollar keeps dropping vs. rival foreign currencies. In fact, the greenback now is trading near a record low against the euro after the 13-nation currency climbed to within 1 cent of its all-time high on Monday.
There are many reasons why the U.S. dollar has lost value against the world’s other major currencies. Massive U.S. budget and trade deficits are chief among the causes of the dollar’s woes. The dollar’s weakness can be seen graphically in the chart below.
With respect to budget deficits, I read a study recently indicating that more than half of all Americans (52.6%) now receive significant income from government programs. Gary Shilling, an economist in Springfield, N.J., said the percentage is up from 49.4% in 2000 and far above 28.3% in 1950. If this trend continues, the percentage of Americans receiving significant income from government programs could rise within 10 years to pass 55% — the level it reached in 1980 on the eve of President Reagan’s move to scale back the size of the U.S. government.
My friends, it certainly seems as though the era of big government is back with a vengeance. Of course, we can’t forget about the aging baby-boom generation, which is poised to receive big payments from Social Security and government healthcare programs during the next few decades.
What this means is that the worst may not be over for the dollar. The question for savvy investors now becomes how do we capitalize on this trend?
Right now in my High Monthly Income advisory service, income-oriented investors are profiting from a 60% allocation to exchange-traded funds and mutual funds that are not tethered to the performance of the U.S. dollar or in funds that rise when the dollar falls.
Let me ask you this, do you have a falling dollar strategy? If you can’t answer "yes," and if the primary goal of your portfolio is to generate income while growing principal, then my High Monthly Income service is for you.